March 9, 1971
Surveys of businessmen and bankers in the Fifth District indicate general agreement on the following points: (1) some improvement in manufacturers' shipments, volume of new orders, and backlogs of orders; (2) significant further improvement in retail sales, including automobiles; (3) stability in the employment situation, but no clear evidence of improvement; (4) further reductions of prices in manufacturing, but not in retail goods and services; (5) sharp improvement in residential construction, and some increase in nonresidential construction; (6) substantial increases in mortgage loan demand, and slight increases in consumer loan demand, but no significant improvement in business loan demand; and (7) a generally more optimistic outlook regarding future business conditions.
District manufacturers report an improvement during February in their shipments, volume of new orders, and backlog of orders. This is the first significant improvement in the sentiment of District manufacturers since September. Improvement is reported by important producers in ferrous metals, metal products, furniture, hosiery, and synthetic fibers.
Retail sales improved further during February according to District bankers and businessmen in trade and services. Automobile sales continued the sharp upswing begun in January.
Manufacturers report that inventories have declined somewhat in recent weeks, while retailers' inventories have tended to increase in line with seasonal expectations.
While some further declines in employment are reported by District bankers for their respective areas, some improvement is reported by District manufacturers. Also, manufacturers report no significant change recently in the length of the workweek. On balance, the District employment situation appears to have stabilized, although definite improvement is not yet clearly in evidence.
Some further reductions in prices are reported by manufacturers in textiles, electrical equipment, nonferrous metals, and coal. Builders materials producers, however, report price advances, and retailers indicate that prices of consumer goods and services are continuing to rise on balance. Continued upward pressure on wages is reported by respondents across the Board.
Considerable improvement in residential construction activity is reported for February by District bankers in South Carolina, North Carolina, Virginia, and Maryland. Nonresidential building activity is also reported significantly improved. Comments received from survey respondents indicate a recovery in progress in the construction field.
Mortgage loan demand in District banks is reported to have improved sharply during February. Consumer loan demand also increased slightly, according to bankers. Business loan demand, however, still is reported down in February, but not as depressed as it had been for the previous three months.
The general outlook of survey respondents improved substantially in recent weeks. Comments received from respondents indicate growing optimism concerning consumer spending, residential construction, employment, and prices. Some continuing strikes and the prospects of the strikes during the current year, however, contribute some caution to respondents' outlooks. Manufacturers, who have pared down capital expansion plans rather sharply in recent months, continue to indicate no significant desire to increase spending in this area in the near future.